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Letter to USDOT: Federal Loan for All Aboard Florida Is Too Risky

July 26, 2017 - 4:15pm
Sebastian train trestle
Sebastian train trestle

Indian River and Martin Counties have NOT ended their fight to right the wrongs they say are chugging through government channels -- wrongs that would bring a high-speed rail project through the Treasure Coast at great cost to taxpayers.

Together with Citizens Against Rail Expansion in Florida (CARE FL), the counties have sent a letter to the U.S. Department of Transportation (USDOT) and the USDOT Credit Council about All Aboard Florida’s (AAF) highspeed passenger rail service.

The six-page letter asks USDOT Secretary Elaine Chao to "exercise extreme caution" before considering or approving AAF’s request for a Railroad Rehabilitation and Improvement Financing (RRIF) loan to build out Phase II of the project connecting West Palm Beach to Orlando.  The letter warns the loan is unlikely to be payable and creates a very high risk of default for taxpayers. (It is available for review by downloading the attachment shown in blue at the end of this story.)

“We believe AAF is struggling to find a way to finance Phase II," said Indian River Attorney Dylan Reingold. "In fact, they have unsuccessfully tried to sell tax-free private activity bonds (PABs) on at least three different occasions. To date, they have been unable to find buyers, and as recently as Nov. 28, 2016, withdrew the company’s PAB application.” 

In 2015, CARE FL commissioned an economic impact study by John Friedman, former White House National Economic Council special assistant in the Obama Administration.  Friedman’s study concluded that even when making all optimistic assumptions to favor AAF, the project would generate annual losses of more than $100 million  and AAF would be unable to service its debt burden. Findings from the Friedman study were included in the letter that was sent to USDOT earlier this week.

“CARE FL urges USDOT to review the findings presented by Dr. Friedman, along with recent developments including ownership changes by the company that present unacceptable financial uncertainties for a project of this magnitude,” said Brent Hanlon, chairman of CARE FL.  “In the past three years, we have seen AAF pursue multiple government-subsidized funding options, and that alone is cause for great concern.”

The recent split in ownership between AAF’s parent company, Florida East Coast Industries (FECI), now owned by SoftBank, and Florida East Coast Railway (FECR), now owned by Grupo Mexico, is a red flag. USDOT needs to consider that AAF only has an easement to use the corridor and will not own the tracks, even if paid for by the RRIF loan. USDOT should also consider the financial health of Grupo Mexico.

Additionally, academic studies have demonstrated that most rail projects exceed the expected project costs, which would further impact the reasonable credit analysis for the AAF project. In fact, in a 2008 report prepared by the Federal Transit Administration’s Office of Planning and Environment, the authors reported that “[o]n average, for the 21 projects completed between 2003 and 2007, actual construction costs exceeded the inflation-adjusted estimates developed in alternatives analysis by 40.2 percent.”

Said Martin County Administrator Taryn Kryzda, “AAF is trying to pass off this project as privately funded when it is anything but. To help protect their profits, AAF is trying to shift the cost of rail safety upgrades and maintenance to Treasure Coast counties in perpetuity. This impacts every single taxpayer.”

The letter also urges USDOT to consider a very important factor: the proximity of the rail project to President Donald Trump’s often visited property, Mar-a-Lago, located near the West Palm Beach station. The U.S. Secret Service and others responsible for protecting the president should be asked to consider the safety implications that could result from highspeed passenger rail and freight trains (carrying hazardous materials including LNG) running on the same tracks.

For more information, visit,, and CARE FL’s site at


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I would like to point out a factual error in your article….. The All Aboard Florida Train is Not High Speed Rail. The All Aboard Florida Train is a belching diesel locomotive with a max speed of 110 mph using technology that we developed in the early 1900's. The International Union of Railways defines a High Speed train as one that can sustain a minimum of 135 mph, operates on specially designed high speed tracks and uses electricity to power. The EU Directive, which is the regulatory agency for high speed rail in Europe says a high speed train must be able to maintain 155 mph and also operate on electricity. Clearly, the All Aboard Florida Train is not High Speed Rail. Florida had the opportunity several years back to build a High Speed Train from Orlando to Tampa... It would then have been extended to Miami in the coming years. This would have cost Florida Tax payers nothing.... all the funding would have come from Federal Dollars. However, because of our short sited politicians (i.e. Rick Scott), and their political agendas, the true High Speed Train was never build and the free money was given to other states. So what does Florida end up with? Private "slow speed" rail service, backed by $1.75 Billion in Federal Bonds, operating on a private rail line owned by Florida East Coast Industries. So, the taxpayers take all the risk and Rick Scott’s cronies make all the money. Please do not mislead the citizens of Florida into believing that All Aboard Florida is in anyway High Speed Rail.

I find it interesting that there is NOT a named author for this article (“written by Sunshine State News?”), and its footnote references links "for more information" that seemingly only represent Treasure Coast organizations clearly in opposition of this transit project. So is this an editorial, a news piece or just paid political announcement? I read Sunshine State News daily. The editorials and news pieces are some of the best written and most thought provoking in the state. However, I find this particular article to be intellectually dishonest for it seems to represent the interests of a single group of constituents who are already on record that they oppose the Brightline project continuing through Martin & Indian River counties. For the record, I was born in Palm Beach County and grew up in Stuart Florida. This debate has been around since regional leaders started talking about fast rail service when I was in High School (MCHS class of 1984). The region’s population has more than doubled since then. Most of the major arteries are “clogged up” from Miami all the way through St Lucie County for large parts of the day. In addition, the region is fast becoming more densely populated as commuters move further north to take advantage of available housing and county services. This trend is not going to slowdown. In fact, this unprecedented growth is rapidly making Central and Southern Florida one of the most populated areas in the country. Transit planning and growth management go hand-in-hand. I have often wondered why my hometown is constantly in opposition of these projects. Martin County has a long history of resisting transit projects going back to the Roosevelt era of the 1930s. The local officials then tried to stall the building of US Federal Highway 1. In the 1960s, a generation later tried to halt the right of way for the emerging Florida Turnpike System. In fact, it wasn’t until the mid-1980s that the Federal government finally completed the only missing tract of I-95 through Martin County (and as everyone knows, it was deliberately routed in parallel to the FL Turnpike, perhaps as a last vindictive act on behalf of county authorities)! The FEC Railway already have federal “right-of way” and have the necessary approvals to move forward on the Brightline project all the way to Orlando. It is true, that the financing of the final leg from Palm Beach to Orange County is still not funded. The project economics are for Brightline to solve. However, whether this project moves forward or not does not depend on local county approval or even support. Just like US1, the FL Turnpike and I-95, this fast rail commuter system will eventually get built because the region will need it as a long term solution to increasing congestion and commuter travel volume. And that would be an interesting editorial about which to write.

The author of the above comments obviously doesn't know much about AAF or purposely has misrepresented it. It is not a commuter railroad. It is supposed to be a high speed RR with NO stops for commuters. The chances of it ever having sufficient riders to repay its costs are nil.

Actually, it stops in Miami, FT Lauderdale and West Palm Beach. The fact that it doesn't stop anywhere in Martin or Indian River Counties is likely because they are in clear opposition of it. The Brevard county commission is on record as a supporter of Brightline. And yes, I use the term "commuter" loosely because I have lived in Europe and the Northeast US where high speed rail was in fact used by both travelers and regional commuters. Nonetheless, it is part of the modern municipal landscape in regions with an advanced infrastructure. My point remains the same: mass transit and managed growth need to work collaboratively to reduce the current gridlock that is only going to get worse as more families move into what is already a densely populated area.

I count 8 flights per day each way between Orlando and Miami. Total of 16. Total capacity each is about 150 passengers- same as one rail car. Brightline lproposes 32 multi car trains per day, total capacity at least 20x the airline capacity. Rail prices are proposed to be similar or just below air. Makes no sense sense! Will not impact auto traffic at all! By the time it is done autos will be driverless (and electric)!

Be CAREFUL Florida, Federal money and "loans' ALWAYS come with "strings"......("ropes" is a better term, since they will be used to "hang" Florida's Citizen Taxpayers !) [You are staring right into a never-ending "Money Pit" Florida ! ] {Can ANYONE say "AMTRAK"????}

If you actually look into the names of the politicians who STRONGLY support 'All Aboard Florida's (AAF), you will see that they ALMOST ALL represent SOUTH Florida; 'AAF" is nothing more than "just one more entitlement gift" to people who "gather entitlements" by voting to RE-elect largely inept politicians at extreme costs to THE REST OF FLORIDIANS !

You, of all people, should know full well about entitlements from the porch of your trailer park...

"entitlements",...That's your ONLY word with over two syllables "Cow Fart" (and there are only three of those). You're starting to convince me that you're a South Florida member of the legislature ( ;- )

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